Tuesday, September 23, 2008

Joel Bakan's book compares corporate behavior to that of a sociopath, and finds that given the legal mandate of the corporation - to infinitely expand in order to make profit for the shareholders - it can actually function no other way, and if a corporate leader tries to change it, they will inevitably have to be removed. A fascinating look at the dominant financial power in the world today.

p. 5 "Over the last 150 years the corporation has risen from relative obscurity to become the world's dominant economic institution. Today, corporations govern our lives. They determine what we eat, what we watch, what we wear, where we work, and what we do. We are inescapably surrounded by their culture, iconography, and ideology. And, like the church and monarchy in other times, they posture as infallible and omnipotent, glorifying themselves in imposing buildings and elaborate displays. Increasingly, corporations dictate the decisions of their supposed overseers in government and control domains of society once firmly embedded within the public sphere. The corporation's dramatic rise to dominance is one of the remarkable events of modern history"

p. 14 " ... with most meaningful constraints on mergers and acquisitions gone, a large number of small and medium-size corporations were very quickly absorbed into a small number of very large ones - 1,800 corporations were consolidated into 157 between 1898 and 1904. In less than a decade the U.S. economy had been transformed from one in which individually owned enterprises competed freely amongst themselves into one dominated by a relatively few huge corporations, each owned by many shareholders. The era of corporate capitalism had begun."

p. 18 "By the end of World War I, some of America's leading corporations ... were busily crafting images of themselves as benevolent and socially responsible. 'New Capitalism', the term used to describe the trend, softened corporations' images with promises of good corporate citizenship and practices of better wages and working conditions. As citizens demanded that governments rein in corporate power and while labor militancy was rife, with returning World War I veterans, having risked their lives as soldiers, insisting upon better treatment as workers, proponents of the New Capitalism sought to demonstrate that corporations could be good without the coercive push of governments and unions."

p. 20 "Despite corporate leaders claims that they were capable of regulating themselves, in 1934 President Franklin D. Roosevelt created the New Deal, a package of regulatory reforms designed to restore economic health by, among other things, curbing the powers and freedoms of corporations. As the first systematic attempt to regulate corporations and the foundation of the modern regulatory state, the New Deal was reviled by many business leaders at the time and even prompted a small group of them to plot a coup to overthrow Roosevelt's administration ... The spirit of the New Deal, along with many of its regulatory regimes, nevertheless prevailed. For fifty years following its creation, through World War II, the postwar era, and the 1960s and 1970s, the growing power of corporations was offset, at least in part, by continued expansion of government regulation, trade unions, and social programs. Then, much as steam engines and railways had combined with new laws and ideologies to create the corporate behemoth one hundred years earlier, a new convergence of technology, law, and ideology - economic globalization - reversed the trend toward greater regulatory control of corporations and vaulted the corporation to unprecedented power and influence."

p 34-35 "Friedman thinks that corporations are good for society and that too much government is bad. He recoils, however, at the idea that corporations should try to do good for society. 'A corporation is the property of its stockholders,' he told me. 'Its interests are the interests of its stockholders.' ... There is but one 'social responsibility' for corporate executives, Friedman believes: they must make as much money as possible for their shareholders. This is a moral imperative. Executives who choose social and environmental goals over profits - who try to act morally - are, i fact, immoral. There is, however, one instance when corporate social responsibility can be tolerated, according to Friedman - when it is insincere."

p 45 "Unlike a refusal to drill on the coastal plain, BP's green initiatives to date have been relatively inexpensive, designed to enhance performance and yield short- and long-term benefits that outweigh their costs. BP met its commitment to implement the Kyoto Protocol's standards, for example, at no net cost to itself. Other BP programs, such as solar-powered gas stations, school programs, and urban clean air initiatives have similarly helped the company bolster its green image at little cost. The benefits to BP of these initiatives are obvious. As Browne says, they create a corporate image that serves as a source of competitive advantage over other companies, giving consumers of oil and gas a greener alternative."

p 47-48 "Pfizer can write off the free drugs as charitable donations and thus save itself money at tax time ... Doctors Without Borders estimates that U.S. taxpayers spend four times as much money to donate fluconazole to South Africa through tax benefits to drug companies as they would to send the drugs to South Africans through aid programs (assuming companies sold the drugs to governments at reduced prices) ... when Doctors Without Borders set up its trachoma treatment program in the African country of Mali, it said "No, thank you" to Pfizer's offer of free Zithromax. Instead it imported, and paid for, a generic version of the drug. Thus, the organization's Rachel Cohen explained, "If Pfizer decides one day to just leave the country or do away with its program or cut back for some reason ... we can ensure the drug remains available for the people that need it in the country."

p 55 "The managers who do these things are not monsters, Roddick says. They may be kind and caring people ... Yet ... they compartmentalize their lives. They are allowed, often compelled, by the corporation's culture to disassociate themselves from their own values - the corporation, according to Roddick, 'stops people from having a sense of empathy with the human condition ... The language of business is not the language of the soul or the language of humanity ... It is fashioning a schizophrenia in many of us."

p 57-58 "The corporation itself may not so easily escape the psychopath diagnosis, however ... it ... is singularly self-interested and unable to feel genuine concern for others in any context. Not surprisingly, then, when we asked Dr. Hare to apply his diagnostic checklist of psychopathic traits to the corporation's institutional character, he found there was a close match. The corporation is *irresponsible*, Dr. Hare said, because "in an attempt to satisfy the corporate goal, everybody else is put at risk." Corporations try to "*manipulate* everything, including public opinion, and they are *grandiose*, always insisting "that we're number one, we're the best." A *lack of empathy* and *asocial tendencies* are also key characteristics of the corporation, says Hare - "their behavior indicates they don't really concern themselves with their victims"; and corporations often *refuse to accept responsibility for their own actions* and are *unable to feel remorse*: "if they get caught breaking the law, they pay big fines and they ... continue doing what they did before anyway. And in fact in many cases the fines and the penalties paid by the organization are trivial compared to the profits that they rake in."

p 66-67 "Kernaghan struck gold on one of his garbage dump forays when, in the Dominican Republic, he found copies of Nike's internal pricing documents in a box that had been left by one of the garbage trucks ... Their purpose was to maximize the amount of profit that could be wrung out of the girls and young women who sew garments for Nike in developing-world sweatshops ... 8 cents worth of labor for a shirt Nike sells in the United States for $22.99. 'The science of exploitation' is how Kernaghan describes the pricing documents. Their cold calculations, he says, mask the suffering and misery of the work they demand. The typical factory Kernaghan visits in a country such as Honduras or Nicaragua, China or Bangladesh, is surrounded by barbed wire. Behind its locked doors, mainly young women workers are supervised by guards who beat and humiliate them on the slightest pretext and who fire them if a forced pregnancy test comes back positive."

p 69 "The corporation, like the psychopathic personality it resembles, is programmed to exploit others for profit. That is its only legitimate mandate. From that perspective, Wendy Diaz, and the millions of other workers across the globe who are driven by poverty and starvation to work in dreadful conditions for shocking wages, are not human beings so much as human 'resources'. To the morally blind corporation, they are tools to generate as much profit as possible."

p 72 "We're all sinners" says Anderson today of his position as a corporate chief. "Someday people like me will end up in jail."

p 74-75 "Despite the Fair Labor Standards Act's clear injunctions against them, sweatshops exist in North America, and every one of them is a fire disaster waiting to happen ... Sixty-five percent of all apparel operations in New York City are sweatshops. Fifty thousand workers. Forty-five hundred factories out of seven thousand ... Los Angeles is no better. The southern end of the city houses America's, and perhaps the world's, largest concentration of garment sweatshops, staffed by some one hundred and sixty thousand workers, many of them illegal, and thus powerless, immigrants."

p 87 "After a brief exchange of pleasantries, MacGuire told Butler he had been sent by a group of businessmen to ask the general to raise an army, seize the White House, and install himself as fascist dictator of the United States. Many business leaders at the time found fascism attractive, especially when they compared it to the 'class hatred ... preached from the White House' as Herbert Hoover characterized Roosevelt's New Deal. Benito, Mussolini and Hitler had slashed the public debt, curbed inflation, driven down wages, and taken control of the trade unions ... Roosevelt, on the other hand, had turned traitor to his class"

p 111 "It was one of the worst things I've seen in my lifetime." Carlton Brown, a normally unflappable commodities broker, was deeply troubled by what he had seen on September 11, 2001. "All I could think about was getting them the hell out," he says. "Before the building collapsed, all we were thinking was, let's get those clients out" - out of the gold market, that is. Brown was mainly concerned about clients who might get trapped in the gold market, which he knew would close once the World Trade Center towers collapsed. When the airplanes hit the towers, says Brown, "the first thing you thought about was 'Well, how much is gold up?'" Fortunately, he says, "in the next couple of days we got them all out ... everybody doubled their money." September 11 "was a blessing in disguise, devastating, you know, crushing, heart-shattering. But ... for my clients that were in the gold market, they all made money," he says. "In devastation there is opportunity. It's all about creating wealth."

p 121-122 "The fate of entire corporate empires could depend upon marketers' abilities to get children to nag their parents effectively. "With McDonalds," for example, says Hughes, "parents wouldn't be going there unless their child nags." Chuck E. Cheese's? "Oh my goodness," says Hughes. "It's so noisy, and there's so many kids. Why would I want to spend two hours there?"

p 128 "Corporations have even infiltrated school curricula with curriculum kits, usually offered to schools for free, that promote their products (such as the school program on nutrition sponsored by McDonalds that uses a Big Mac to illustrate the four food groups); and their perspectives (such as Proctor & Gamble's classroom Decision Earth program, which states that 'clear-cutting removes all trees ... to create new habitats for wildlife. P&G uses this economically and environmentally sound method because it most closely mimics nature's own processes. Clear cutting also opens the floor to sunshine, thus stimulating growth and providing food for animals."

p 139 "Yet history humbles the dominant institutions. Great empires, the church, monarchy, the Communist parties of Eastern Europe were all overthrown, diminished, or absorbed into new orders. It is unlikely that the corporation will be the first dominant institution to defy history. It has failed to solve, and has indeed worsened, some of the world's most pressing problems: poverty, war, environmental destruction, ill health."

p 152 "More generally, the democratic system as a whole ill serves its animating ideals. Broad public participation in self-government is absent, as people's participation is limited to occasional voting, and close to half the population does not even do that; politicians are unduly pressured and influenced by corporate money and increasingly deprived of meaningful decision-making powers, as deregulation and privatization roll back government's domain; the public sphere is shrinking, and social inequality is rampant. Despite all of this, however, as Chomsky states, "Whatever one thinks of governments, they're to some extent publicly accountable, to a limited extent. Corporations are to a zero extent ... One of the reasons why propaganda tries to get you to hate government is because it's the one existing institution in which people can participate to some extent and constrain tyrannical unaccountable power."